Monday, June 13, 2011

How To Make Money from Forex

In the foreign exchange market to buy or sell currencies. Place a trade in the foreign exchange market is simple: the mechanics of a trade are very similar to those in other markets (like the stock market), took place so if you have experience in business, you should be able to pick up pretty quickly.The purpose of trade is to exchange one currency for another in the hope that the price change so that the currency you have bought, the value is compared to the selling of you enhance.

How to Read Forex Quote

Always Currencies trading take place in pairs like EUR / USD or USD / CHF. The reason they are quoted in pairs, because in every foreign exchange transaction simultanesouly you buy one currency and sale of another. An example of an exchange rate of sterling against the dollar:

GBP / USD = 1.7500

Currency on the left side of the slash ("/") is the base currency is called (in this example, the British pound) and on the right side as a free quote currency or currencies (in this example, the dollar is American).

When you are buying, the exchange rate, how much you pay in units of the quote currency to buy one unit of base currency. In the above example, you have to pay $ 1.7500 to buy one pound.

When selling, the exchange rate specifies how many units get the quote currency to you on the sale of one of the base currency. In the above example, you get 1.7500 U.S. dollars when you sell 1 British pound.

The base currency is the "basis" for the purchase or sale. If you are EUR / USD buy this simply means that you buy the base currency and simultaneously selling the quote currency.

You buy the pair if you believe the base currency will appreciate against the quote currency. They sell the pair if you think the base currency will depreciate against the currency count.
Long / Short

First you must decide whether to buy or sell.

If you buy (which actually means buy the base currency and sell the quote currency) want, you want the base currency to rise in value and then sell them at a higher price. Tell dealer, it's called "going long" or a "long position." Long = Buy Remember.

If you sell (which actually means sell the base currency and buying the quote currency) want, you want to drop the base currency in value and then buys it back at a lower price. This is called "going short" or a "short position". Short = sell.
Bid / Ask Spread

All Forex quotes include a two-way price, the bid and ask prices. The offer is still less than the asking price.

The auction is the price at which the dealer is willing to buy the base currency in exchange for the quote currency. This means that the offer is the price you sell to dealers.

The installation is the price at which the dealer sell the base currency in exchange for the quote currency. This means that the demand the price that the dealer you buy.

The difference between bid and ask price is popularly known as the spread.

Let us look an example of a trading software:

In this quotation EUR / USD, the price is 1.2293 and the ask price is 1.2296. Watch how the broker makes it so easy to sell for you, get out your money. If you wish to sell in Euros, click on "Sell" and you sold Euros at 1.2293. If you want to buy the Euro, click "Buy" and you can buy euros at 1.2296.

In the following examples, I use fundamental analysis to help us decide to sell or buy a particular currency pair. If you are still asleep during your economics class or just skipped class just full-throttle economy, do not worry, we address basic analysis in a later lesson. At the moment, try to pretend you know what happens.